EN BANC

[G.R. No. 143596. December 11, 2003]

JUDGE TOMAS C. LEYNES, petitioner, vs. THE COMMISSION ON

AUDIT (COA), HON. GREGORIA S. ONG, DIRECTOR,
COMMISSION ON AUDIT and HON. SALVACION DALISAY,
PROVINCIAL AUDITOR, respondents.

DECISION
CORONA, J.:

Before us is a petition for certiorari under Rule 65 in relation to Section 2, Rule 64 of

the Rules of Court, seeking to reverse and set aside the decision dated September 14,
[1]

1999 of the Commission on Audit (COA), affirming the resolution of COA Regional
Director Gregoria S. Ong dated March 29, 1994 which in turn affirmed the opinion dated
October 19, 1993 of the Provincial Auditor of Oriental Mindoro, Salvacion M. Dalisay. All
three denied the grant of P1,600 monthly allowance to petitioner Judge Tomas
C. Leynes by the Municipality of Naujan, Oriental Mindoro.

FACTUAL ANTECEDENTS

Petitioner Judge Tomas C. Leynes who, at present, is the presiding judge of

the Regional Trial Court of Calapan City, Oriental Mindoro, Branch 40 was formerly
assigned to the Municipality of Naujan, Oriental Mindoro as the sole presiding judge of
the Municipal Trial Court thereof. As such, his salary and representation and
transportation allowance (RATA) were drawn from the budget of the Supreme Court. In
addition, petitioner received a monthly allowance of P944 from the local funds of [2]

the Municipality of Naujan starting 1984. [3]

On March 15, 1993, the Sangguniang Bayan of Naujan, through Resolution No.
057, sought the opinion of the Provincial Auditor and the Provincial Budget Officer
regarding any budgetary limitation on the grant of a monthly allowance by the
municipality to petitioner judge. On May 7, 1993, the Sangguniang Bayan unanimously
approved Resolution No. 101 increasing petitioner judges monthly allowance from P944
to P1,600 (an increase of P656) starting May 1993. By virtue of said resolution, the
[4]

municipal government (the Municipal Mayor and the Sangguniang Bayan) approved a
supplemental budget which was likewise approved by
the Sangguniang Panlalawigan and the Office of Provincial Budget and Management of
Oriental Mindoro. In 1994, the Municipal Government of Naujan again provided for
petitioner judges P1,600 monthly allowance in its annual budget which was again
approved by the Sangguniang Panlalawigan and the Office of Provincial Budget and
Management of Oriental Mindoro. [5]

On February 17, 1994, Provincial Auditor Salvacion M. Dalisay sent a letter to the
Municipal Mayor and the Sangguniang Bayan of Naujan directing them to stop the
payment of the P1,600 monthly allowance or RATA to petitioner judge and to require the
immediate refund of the amounts previously paid to the latter. She opined that
the Municipality of Naujan could not grant RATA to petitioner judge in addition to the
RATA the latter was already receiving from the Supreme Court. Her directive was based
on the following:

Section36,RANo.7645,GeneralAppropriationsActof1993

RepresentationandTransportationAllowances.Thefollowingofficialsandthoseof
equivalentrankasmaybedeterminedbytheDepartmentofBudgetandManagement
(DBM)whileintheactualperformanceoftheirrespectivefunctionsarehereby
grantedmonthlycommutablerepresentationandtransportationallowancespayable
fromtheprogrammedappropriationsprovidedfortheirrespectiveoffices,not
exceedingtheratesindicatedbelow...

NationalCompensationCircularNo.67datedJanuary1,1992,oftheDepartmentof
BudgetandManagement

Subject:RepresentationandTransportationAllowancesofNationalGovernment
OfficialsandEmployees

xxxxxxxxx

4.FundingSource:Inallcases,commutableandreimbursableRATAshallbepaid
fromtheamountappropriatedforthepurposeandotherpersonalservicessavingsof
theagencyorprojectfromwheretheofficialsandemployeescoveredunderthis
Circulardrawtheirsalaries.NooneshallbeallowedtocollectRATAfrommorethan
onesource. (emphasissupplied)
[6]

Petitioner judge appealed to COA Regional Director Gregoria S. Ong who, however,
upheld the opinion of Provincial Auditor Dalisay and who added that Resolution No. 101,
Series of 1993 of the Sangguniang Bayan of Naujan failed to comply with Section 3 of
Local Budget Circular No. 53 dated September 1, 1993 outlining the conditions for the
grant of allowances to judges and other national officials or employees by the local
government units (LGUs). Section 3 of the said budget circular provides that:
Sec.3Allowances.LGUsmaygrantallowances/additionalcompensationtothe
nationalgovernmentofficials/employeesassignedtotheirlocalityatratesauthorized
bylaw,rulesandregulationsandsubjecttothefollowingpreconditions:

a.Thattheannualincomeorfinancesofthemunicipality,cityorprovinceas
certifiedbytheAccountantconcernedwillallowthegrantofthe
allowances/additionalcompensationwithoutexceedingthegeneral
limitationsforpersonalservicesunderSection325ofRA7160;

b.ThatthebudgetaryrequirementsunderSection324ofRA7160including
thefullrequirementofRA6758havebeensatisfiedandprovidedfully
inthebudgetascertifiedbytheBudgetOfficerandCOArepresentative
intheLGUconcerned;

c.ThattheLGUhasfullyimplementedthedevolutionofpersonnel/functions
inaccordancewiththeprovisionsofRA7160;

d.ThattheLGUhasalreadycreatedmandatorypositionsprescribedinRA
7160;and

e.Thatsimilarallowances/additionalcompensationarenotgrantedbythe
nationalgovernmenttotheofficials/employeesassignedtotheLGU. [7]

Petitioner judge appealed the unfavorable resolution of the Regional Director to the
Commission on Audit. In the meantime, a disallowance of the payment of the P1,600
monthly allowance to petitioner was issued. Thus he received his P1,600 monthly
allowance from the Municipality of Naujan only for the period May 1993 to January
1994.
On September 14, 1999, the COA issued its decision affirming the resolution of
Regional Director Gregoria S. Ong:

Themainissue...iswhetherornottheMunicipalityofNaujan,
OrientalMindorocanvalidlyprovideRATAtoitsMunicipalJudge,inadditionto
thatprovidedbytheSupremeCourt.

Generally,thegrantof(RATA)[sic]toqualifiednationalgovernmentofficialsand
employeespursuanttoSection36ofR.A.7645[GeneralAppropriationsActof1993]
andNCCNo.67dated01January1992issubjecttothefollowingconditionstowit:
 1.Payablefromtheprogrammed/appropriatedamountandothersfrom
personalservicessavingsoftherespectiveofficeswheretheofficialsor
employeesdrawtheirsalaries;

2.NotexceedingtheratesprescribedbytheAnnualGeneralAppropriations
Act;

3.Officials/employeesondetailwithotherofficesorassignedtoserveother
officesoragenciesshallbepaidfromtheirparentagencies;

4.NooneshallbeallowedtocollectRATAfrommorethanonesource.

Ontheotherhand,themunicipalgovernmentmayprovideadditionalallowancesand
otherbenefitstojudgesandothernationalgovernmentofficialsoremployees
assignedorstationedinthemunicipality,provided,thatthefinancesofthe
municipalityallowthegrantthereofpursuanttoSection447,Par.1(xi),R.A.7160,
andprovidedfurther,thatsimilarallowance/additionalcompensationarenotgranted
bythenationalgovernmenttotheofficial/employeeassignedtothelocalgovernment
unitasprovidedunderSection3(e)ofLocalBudgetCircularNo.53,dated01
September1993.

TheconflictingprovisionsofSection447,Par.(1)(xi)oftheLocalGovernmentCode
of1991andSection36oftheGeneralAppropriationsActof1993[RA7645]have
beenharmonizedbytheLocalBudgetCircularNo.53dated01September1993,
issuedbytheDepartmentofBudgetandManagementpursuanttoitspowersunder
Section25andSection327oftheLocalGovernmentCode.Thesaidcircularmustbe
adheredtobythelocalgovernmentunitsparticularlySection3thereofwhichprovides
theimplementingguidelinesofSection447,Par.(1)(xi)oftheLocalGovernment
Codeof1991inthegrantofallowancestonationalgovernmentofficials/employees
assignedorstationedintheirrespectivelocalgovernmentunits.

Consequently,thesubjectSBResolutionNo.101dated11May1993of
theSangguniangBayanofNaujan,OrientalMindoro,havingfailedtocomplywith
theinherentpreconditionasdefinedinSection3(e)...isnullandvoid.Furthermore,
theHonorableJudgeTomasC.Leynes,beinganationalgovernmentofficialis
prohibitedtoreceiveadditionalRATAfromthelocalgovernmentfundpursuantto
Section36oftheGeneralAppropriationsAct(R.A.7645for1993)andNational
CompensationCircularNo.67dated1January1992. (emphasisours)
[8]
ASSIGNMENTS OF ERROR

Petitioner judge filed a motion for reconsideration of the above decision but it was
denied by the Commission in a resolution dated May 30, 2000. Aggrieved, petitioner
filed the instant petition, raising the following assignments of error for our consideration:
I

WHETHERORNOTRESOLUTIONNO.1O1,SERIESOF1993OFNAUJAN,
ORIENTALMINDORO,WHICHGRANTEDADDITIONALALLOWANCETO
THEMUNICIPALTRIALJUDGEOFNAUJAN,ORIENTALMINDOROAND
INCREASINGHISCURRENTREPRESENTATIONANDTRAVELLING
ALLOWANCE(RATA)TOANAMOUNTEQUIVALENTTOTHATRECEIVED
MONTHLYBYSANGGUNIANGMEMBERSINPESOS:ONETHOUSANDSIX
HUNDRED(P1,600.00)EFFECTIVE1993,ISVALID.

II

WHETHERORNOTTHEPOWEROFMUNICIPALGOVERNMENTSTO
GRANTADDITIONALALLOWANCESANDOTHERBENEFITSTO
NATIONALGOVERNMENTEMPLOYEESSTATIONEDINTHEIR
MUNICIPALITYISVERYEXPLICITANDUNEQUIVOCALUNDERTHE
LOCALGOVERNMENTCODEOF1991PARTICULARLYSECTION447IN
RELATIONTOSECTIONS17AND22THEREOF.

III

WHETHERORNOTTHEDEPARTMENTOFBUDGETANDMANAGEMENT
(DBM)CAN,BYTHEISSUANCEOFBUDGETCIRCULARS,RESTRICTA
MUNICIPALGOVERNMENTFROMEXERCISINGITSGIVENLEGISLATIVE
POWERSOFPROVIDINGADDITIONALALLOWANCESANDOTHER
BENEFITSTONATIONALEMPLOYEESSTATIONEDORASSIGNEDTO
THEIRMUNICIPALITYFORASLONGASTHEIRFINANCESSOALLOW.

IV

WHETHERORNOTTHELOCALGOVERNMENTCODEOF1991
PARTICULARLYSECTION447(a)(1)(xi)WASEXPRESSLYORIMPLIEDLY
REPEALEDORMODIFIEDBYREPUBLICACT7645ANDTHEGENERAL
APPROPRIATIONSACTOF1993.

V
WHETHERORNOTPETITIONERWASENTITLEDTORECEIVETHE
ADDITIONALALLOWANCESGRANTEDTOHIMBYTHEMUNICIPALITY
OFNAUJAN,ORIENTALMINDOROBYVIRTUEOFITSRESOLUTIONNO.
101,SERIESOF1993.

POSITION OF COA

Respondent Commission on Audit opposes the grant by

the Municipality of Naujan of the P1,600 monthly allowance to petitioner
Judge Leynes for the reason that the municipality could not grant RATA to judges in
addition to the RATA already received from the Supreme Court. Respondent bases its
[9]

contention on the following:

1. National Compensation Circular No. 67 (hereafter NCC No. 67) dated January 1,
1992 of the Department of Budget and Management (DBM) which provides that
(a) the RATA of national officials and employees shall be payable from the
programmed appropriations or personal services savings of the agency where
such officials or employees draw their salary and (b) no one shall be allowed to
collect RATA from more than one source;
2. the General Appropriations Act of 1993 (RA 7645) which provided that the RATA
of national officials shall be payable from the programmed appropriations of
their respective offices and
3. Local Budget Circular No. 53 (hereafter LBC No. 53) dated September 1, 1993 of
the DBM which prohibits local government units from granting allowances to
national government officials or employees stationed in their localities when
such allowances are also granted by the national government or are similar to
the allowances granted by the national government to such officials or
employees. [10]

POSITION OF PETITIONER

Petitioner judge, on the other hand, asserts that the municipality is expressly and
unequivocally empowered by RA 7160 (the Local Government Code of 1991) to enact
appropriation ordinances granting allowances and other benefits to judges stationed in
its territory. Section 447(a)(1)(xi) of the Local Government Code of 1991 imposes only
one condition, that is, when the finances of the municipal government allow. The Code
does not impose any other restrictions in the exercise of such power by the municipality.
Petitioner also asserts that the DBM cannot amend or modify a substantive law like the
Local Government Code of 1991 through mere budget circulars. Petitioner emphasizes
that budget circulars must conform to, not modify or amend, the provisions of the law it
seeks to implement. [11]
HISTORY OF GRANT OF
ALLOWANCES TO JUDGES

The power of local government units (LGUs) to grant allowances to judges stationed
in their respective territories was originally provided by Letter of Instruction No. 1418
dated July 18, 1984 (hereafter LOI No. 1418):

WHEREAS,theStateiscognizantoftheneedtomaintaintheindependenceofthe
Judiciary;

WHEREAS,thebudgetaryallotmentoftheJudiciaryconstitutesonlyasmall
percentageofthenationalbudget;

WHEREAS,presenteconomicconditionsadverselyaffectedthelivelihoodofthe
membersoftheJudiciary;

WHEREAS,somelocalgovernmentunitsareready,willingandableto
payadditionalallowancestoJudgesofvariouscourts withintheirrespective
territorialjurisdiction;

NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentoftheRepublicof
thePhilippines,doherebydirect:

1.Section3ofLetterofImplementationNo.96isherebyamendedtoread
asfollows:

3.Theallowancesprovidedinthislettershallbeborneexclusivelyby
theNationalGovernment.However,provincial,cityand
municipalgovernmentsmaypayadditionalallowancestothe
membersandpersonneloftheJudiciaryassignedintheir
respectiveareasoutofavailablelocalfunds butnotto
exceedP1,500.00;Provided,thatinMetropolitanManila,thecity
andmunicipalgovernmentsthereinmaypayadditional
allowancesnotexceedingP3,000.00.(emphasisours) [12]

On June 25, 1991, the DBM issued Circular No. 91-7 outlining the guidelines for the
continued receipt of allowances by judges from LGUs:

Consistentwiththeconstitutionalprovisiononthefiscalautonomyofthejudiciary
andthepolicyoftheNationalGovernmentofallowinggreaterautonomytolocal
governmentunits,judgesoftheJudiciaryareherebyallowedtocontinuetoreceive
allowancesatthesamerateswhichtheyhavebeenreceivingfromtheLocal
GovernmentUnitsasofJune30,1989,subjecttothefollowingguidelines:

1.Thatthecontinuanceofpaymentofsubjectallowancetotherecipientjudge
shallbeentirelyvoluntaryandnoncompulsoryonthepartoftheLocal
GovernmentUnits;

2.Thatpaymentoftheaboveshallalwaysbesubjecttotheavailabilityof
localfunds;

3.Thatitshallbemadeonlyincompliancewiththepolicyofnondiminution
ofcompensationreceivedbytherecipientjudgebeforethe
implementationofthesalarystandardization;

4.Thatthesubjectallowanceshallbegivenonlytojudgeswhowere
receivingthesameasofJune30,1989andshallbecoterminouswith
theincumbentjudges;and

5.Thatthesubjectallowanceshallautomaticallyterminateupontransferofa
judgefromonelocalgovernmentunittoanotherlocalgovernmentunit.
(emphasisours)

On October 10, 1991, Congress enacted RA 7160, otherwise known as the Local
Government Code of 1991. The power of the LGUs to grant allowances and other
[13]

benefits to judges and other national officials stationed in their respective territories was
expressly provided in Sections 447(a)(1)(xi), 458(a)(1)(xi) and 468(a)(1)(xi) of the Code.
On March 15, 1994, the DBM issued Local Budget Circular No. 55 (hereafter LBC
No. 55) setting out the maximum amount of allowances that LGUs may grant to
judges. For provinces and cities, the amount should not exceed P1,000 and for
municipalities, P700.
On December 3, 2002, we struck down the above circular in Dadole, et al. vs. COA.
We ruled there that the Local Government Code of 1991 clearly provided
[14]

that LGUscould grant allowances to judges, subject only to the condition that the
finances of the LGUs allowed it. We held that setting a uniform amount for the grant of
allowances (was) an inappropriate way of enforcing said criterion. Accordingly, we
declared that the DBM exceeded its power of supervision over LGUs by imposing a
prohibition that did not jibe with the Local Government Code of 1991. [15]

ESTABLISHED PRINCIPLES INVOLVED

 From the foregoing history of the power of LGUs to grant allowances to judges, the
following principles should be noted:
1. the power of LGUs to grant allowances to judges has long been recognized
(since 1984 by virtue of LOI No. 1418) and, at present, it is expressly and
unequivocally provided in Sections 447, 458 and 468 of the Local Government
Code of 1991;
2. the issuance of DBM Circular No. 91-7 dated June 25, 1991 and LBC No. 55
dated March 15, 1994 indicates that the national government recognizes the
power of LGUs to grant such allowances to judges;
3. in Circular No. 91-7, the national government
merely provides the guidelines for the continued receipt of allowances by
judges from LGUs while in LBC No. 55, the national government merely tries
to limit the amount of allowances LGUs may grant to judges and
4. in the recent case of Dadole, et al. vs. COA, the Court upheld the constitutionally
enshrined autonomy of LGUs to grant allowances to judges in any
amount deemed appropriate, depending on availability of funds, in accordance
with the Local Government Code of 1991.

OUR RULING

We rule in favor of petitioner judge. Respondent COA erred in opposing the grant of
the P1,600 monthly allowance by the Municipality of Naujan to petitioner Judge Leynes.

DISCUSSION OF OUR RULING

Section 447(a)(1)(xi) of RA 7160, the Local Government Code of 1991, provides:

(a)Thesangguniangbayan,asthelegislativebodyofthemunicipality,shallenact
ordinances,approveresolutionsandappropriatefundsforthegeneralwelfareofthe
municipalityanditsinhabitants...,andshall:

(1)Approveordinancesandpassresolutionsnecessaryforanefficientandeffective
municipalgovernment,andinthisconnectionshall:

xxxxxxxxx

(xi)Whenthefinancesofthemunicipalgovernmentallow,provideforadditional
allowancesandotherbenefitstojudges,prosecutors,publicelementaryandhigh
schoolteachers,andothernationalgovernmentofficialsstationedinorassignedtothe
municipality;(emphasisours)

Respondent COA, however, contends that the above section has been repealed,
modified or amended by NCC No. 67 dated January 1, 1992, RA 7645 (the General
Appropriations Act of 1993) and LBC No. 53 dated September 1, 1993. [16]

It is elementary in statutory construction that an administrative circular cannot

supersede, abrogate, modify or nullify a statute. A statute is superior to an
administrative circular, thus the latter cannot repeal or amend it. In the present case,
[17]

NCC No. 67, being a mere administrative circular, cannot repeal a substantive law like
RA 7160.
It is also an elementary principle in statutory construction that repeal of statutes by
implication is not favored, unless it is manifest that the legislature so intended. The
legislature is assumed to know the existing laws on the subject and cannot be
presumed to have enacted inconsistent or conflicting statutes. Respondent COA [18]

alleges that Section 36 of RA 7645 (the GAA of 1993) repealed Section 447(a)(l)(xi) of
RA 7160 (the LGC of 1991). A review of the two laws, however, shows that this was not
so. Section 36 of RA 7645 merely provided for the different rates of RATA payable to
national government officials or employees, depending on their position, and stated that
these amounts were payable from the programmed appropriations of the parent
agencies to which the concerned national officials or employees belonged. Furthermore,
there was no other provision in RA 7645 from which a repeal of Section 447(a) (l)(xi) of
RA 7160 could be implied. In the absence, therefore, of any clear repeal of Section
447(a)(l)(xi) of RA 7160, we cannot presume such intention on the part of the
legislature.
Moreover, the presumption against implied repeal becomes stronger when, as in
this case, one law is special and the other is general. The principle is expressed in the
[19]

maxim generalia specialibus non derogant, a general law does not nullify a specific or
special law. The reason for this is that the legislature, in passing a law of special
character, considers and makes special provisions for the particular circumstances dealt
with by the special law. This being so, the legislature, by adopting a general law
containing provisions repugnant to those of the special law and without making any
mention of its intention to amend or modify such special law, cannot be deemed to have
intended an amendment, repeal or modification of the latter. [20]

In this case, RA 7160 (the LGC of 1991) is a special law which exclusively deals
[21]

with local government units (LGUs), outlining their powers and functions in consonance
with the constitutionally mandated policy of local autonomy. RA 7645 (the GAA of 1993),
on the other hand, was a general law which outlined the share in the national fund of
[22]

all branches of the national government. RA 7645 therefore, being a general law, could
not have, by mere implication, repealed RA 7160. Rather, RA 7160 should be taken as
the exception to RA 7645 in the absence of circumstances warranting a contrary
conclusion.[23]
 The controversy actually centers on the seemingly sweeping provision in NCC No.
67 which states that no one shall be allowed to collect RATA from more than one
source. Does this mean that judges cannot receive allowances from LGUs in addition to
the RATA from the Supreme Court? For reasons that will hereinafter be discussed, we
answer in the negative.
The pertinent provisions of NCC No. 67 read:

3.RulesandRegulations:

3.1.1PaymentofRATA,whethercommutableorreimbursable,shallbe
inaccordancewiththeratesprescribedforeachofthefollowing
officialsandemployeesandthoseofequivalentranks,andthe
conditionsenumeratedunderthepertinentsectionsoftheGeneral
ProvisionsoftheannualGeneralAppropriationsAct(GAA):

xxxxxxxxx

4.FundingSource:

Inallcases,commutableandreimbursableRATAshallbepaidfromtheamount
appropriatedforthepurposeandotherpersonalservicessavingsoftheagencyor
projectfromwheretheofficialsandemployeescoveredunderthisCirculardraw
theirsalaries.NooneshallbeallowedtocollectRATAfrommorethanone
source.(emphasisours)

In construing NCC No. 67, we apply the principle in statutory construction that force
and effect should not be narrowly given to isolated and disjoined clauses of the law but
to its spirit, broadly taking all its provisions together in one rational view. Because a
[24]

statute is enacted as a whole and not in parts or sections, that is, one part is as
important as the others, the statute should be construed and given effect as a whole. A
provision or section which is unclear by itself may be clarified by reading and construing
it in relation to the whole statute.
[25]

Taking NCC No. 67 as a whole then, what it seeks to prevent is the dual collection
of RATA by a national official from the budgets of more than one national agency. We
emphasize that the other source referred to in the prohibition is another national
agency. This can be gleaned from the fact that the sentence no one shall be allowed to
collect RATA from more than one source (the controversial prohibition) immediately
follows the sentence that RATA shall be paid from the budget of the national agency
where the concerned national officials and employees draw their salaries. The fact that
the other source is another national agency is supported by RA 7645 (the GAA of 1993)
invoked by respondent COA itself and, in fact, by all subsequent GAAs for that matter,
because the GAAs all essentially provide that (1) the RATA of national officials shall be
payable from the budgets of their respective national agencies and (2) those officials on
detail with other national agencies shall be paid their RATA only from the budget of their
parent national agency:

Section36,RA7645,GeneralAppropriationsActof1993:

RepresentationandTransportationAllowances.Thefollowingofficialsandthoseof
equivalentrankasmaybedeterminedbytheDepartmentofBudgetandManagement
(DBM)whileintheactualperformanceoftheirrespectivefunctionsarehereby
grantedmonthlycommutablerepresentationandtransportationallowancespayable
fromtheprogrammedappropriationsprovidedfortheirrespectiveoffices,not
exceedingtheratesindicatedbelow,whichshallapplytoeachtypeofallowance:

xxxxxxxxx

Officialsondetailwithotheroffices,includingofficialsoftheCommissionofAudit
assignedtoserveotherofficesoragencies,shallbepaidtheallowanceherein
authorizedfromtheappropriationsoftheirparentagencies.(emphasisours)

Clearly therefore, the prohibition in NCC No. 67 is only against the dual or multiple
collection of RATA by a national official from the budgets of two or more national
agencies.Stated otherwise, when a national official is on detail with another national
agency, he should get his RATA only from his parent national agency and not from the
other national agency he is detailed to.
Since the other source referred in the controversial prohibition is another national
agency, said prohibition clearly does not apply to LGUs like the Municipality of Naujan.
National agency of course refers to the different offices, bureaus and departments
comprising the national government. The budgets of these departments or offices are
fixed annually by Congress in the General Appropriations Act. An LGU is obviously not
[26]

a national agency. Its annual budget is fixed by its own legislative council
(SangguniangBayan, Panlungsod or Panlalawigan), not by Congress. Without doubt,
NCC No. 67 does not apply to LGUs.
The prohibition in NCC No. 67 is in fact an administrative tool of the DBM to prevent
the much-abused practice of multiple allowances, thus standardizing the grant of RATA
by national agencies. Thus, the purpose clause of NCC No. 67 reads:

ThisCircularisbeingissuedtoensureuniformityandconsistencyofactionson
claimsforrepresentationandtransportationallowance(RATA)whichisprimarily
grantedbylawtonationalgovernmentofficialsandemployeestocoverexpenses
incurredinthedischargeorperformanceoftheirdutiesandresponsibilities.

By no stretch of the imagination can NCC No. 67 be construed as nullifying the

power of LGUs to grant allowances to judges under the Local Government Code of
1991. It was issued primarily to make the grant of RATA to national officials under the
national budget uniform. In other words, it applies only to the national funds
administered by the DBM, not the local funds of LGUs.
To rule against the power of LGUs to grant allowances to judges as what
respondent COA would like us to do will subvert the principle of local autonomy
zealously guaranteed by the Constitution. The Local Government Code of 1991 was
[27]

specially promulgated by Congress to ensure the autonomy of local governments as

mandated by the Constitution. By upholding, in the present case, the power of LGUs to
grant allowances to judges and leaving to their discretion the amount of allowances they
may want to grant, depending on the availability of local funds, we ensure the genuine
and meaningful local autonomy of LGUs.
We now discuss the next contention of respondent COA: that the resolution of
the Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to petitioner
judge was null and void because it failed to comply with LBC No. 53 dated September
1, 1993:

Sec.3Allowances.LGUsmaygrantallowances/additionalcompensationtothe
nationalgovernmentofficials/employeesassignedtotheirlocalityatratesauthorized
bylaw,rulesandregulationsandsubjecttothefollowingpreconditions:

a.Thattheannualincomeorfinancesofthemunicipality,cityorprovince
ascertifiedbytheAccountantconcernedwillallowthegrantof
theallowances/additionalcompensationwithoutexceedingthe
generallimitationsforpersonalservicesunderSection325ofRA
7160;

b.ThatthebudgetaryrequirementsunderSection324ofRA7160
includingthefullrequirementofRA6758havebeensatisfiedand
providedfullyinthebudgetascertifiedbytheBudgetOfficerand
COArepresentativeintheLGUconcerned;

c.ThattheLGUhasfullyimplementedthedevolutionof
personnel/functionsinaccordancewiththeprovisionsofRA
7160;

d.ThattheLGUhasalreadycreatedmandatorypositionsprescribedin
RA7160.

e.Thatsimilarallowances/additionalcompensationarenotgrantedbythe
nationalgovernmenttotheofficials/employeesassignedtothe
LGU.
 Though LBC No. 53 of the DBM may be considered within the ambit of the
President's power of general supervision over LGUs, we rule that Section 3, paragraph
[28]

(e) thereof is invalid. RA 7160, the Local Government Code of 1991, clearly provides
that provincial, city and municipal governments may grant allowances to judges as long
as their finances allow. Section 3, paragraph (e) of LBC No. 53,
by outrightly prohibiting LGUs from granting allowances to judges whenever such
allowances are (1) also granted by the national government or (2) similar to the
allowances granted by the national government, violates Section 447(a)(l)(xi) of the
Local Government Code of 1991. As already stated, a circular must conform to the law
[29]

it seeks to implement and should not modify or amend it. [30]

Moreover, by prohibiting LGUs from granting allowances similar to the allowances

granted by the national government, Section 3 (e) of LBC No. 53 practically
prohibits LGUsfrom granting allowances to judges and, in effect, totally nullifies their
statutory power to do so. Being unduly restrictive therefore of the statutory power
of LGUs to grant allowances to judges and being violative of their autonomy guaranteed
by the Constitution, Section 3, paragraph (e) of LBC No. 53 is hereby declared null and
void.
Paragraphs (a) to (d) of said circular, however, are valid as they are in accordance
with Sections 324 and 325 of the Local Government Code of 1991; these
[31] [32]

respectively provide for the budgetary requirements and general limitations on the use
of provincial, city and municipal funds. Paragraphs (a) to (d) are proper guidelines for
the condition provided in Sections 447, 458 and 468 of the Local Government Code of
1991 that LGUs may grant allowances to judges if their funds allow. [33]

Respondent COA also argues that Resolution No. 101 of

the Sangguniang Bayan of Naujan failed to comply with paragraphs (a) to (d) of LBC
No. 53, thus it was null and void.
The argument is misplaced.
Guidelines (a) to (d) were met when the Sangguniang Panlalawigan of
Oriental Mindoro approved Resolution No. 101 of
the Sangguniang Bayan of Naujan granting the P1,600 monthly allowance to petitioner
judge as well as the corresponding budgets of the municipality providing for the said
monthly allowance to petitioner judge. Under Section 327 of the Local Government
Code of 1991, the Sangguniang Panlalawigan was specifically tasked to review the
appropriation ordinances of its component municipalities to ensure compliance with
Sections 324 and 325 of the Code. Considering said duty of
the Sangguniang Panlalawigan, we will assume, in the absence of proof to the contrary,
that the Sangguniang Panlalawigan of Oriental Mindoro performed what the law
required it to do, that is, review the resolution and the corresponding budgets of the
Municipality of Naujan to make sure that they complied with Sections 324 and 325 of
the Code. We presume the regularity of the Sangguniang Panlalawigans official act.
[34]

Moreover, it is well-settled that an ordinance must be presumed valid in the absence

of evidence showing that it is not in accordance with the law. Respondent COA had the
[35]

burden of proving that Resolution No. 101 of the Sangguniang Bayan of Naujan did not
comply with the condition provided in Section 447 of the Code, the budgetary
requirements and general limitations on the use of municipal funds provided in Sections
324 and 325 of the Code and the implementing guidelines issued by the DBM, i.e.,
paragraphs (a) to (d), Section 3 of LBC No. 53. Respondent COA also had the burden
of showing that the Sangguniang Panlalawigan of Oriental Mindoro erroneously
approved said resolution despite its non-compliance with the requirements of the law. It
failed to discharge such burden. On the contrary, we find that the resolution of
the Municipality of Naujan granting the P1,600 monthly allowance to petitioner judge
fully complied with the law. Thus, we uphold its validity.
In sum, we hereby affirm the power of the Municipality of Naujan to grant the
questioned allowance to petitioner Judge Leynes in accordance with the constitutionally
mandated policy of local autonomy and the provisions of the Local Government Code of
1991. We also sustain the validity of Resolution No. 101, Series of 1993, of
the Sangguniang Bayan of Naujan for being in accordance with the law.
WHEREFORE, the petition is hereby GRANTED. The assailed decision
dated September 14, 1999 of the Commission of Audit is hereby SET ASIDE and
Section 3, paragraph (e) of LBC No. 53 is hereby declared NULL and VOID.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr.,
Azcuna, and Tinga, JJ., concur.

[1]
Penned by Chairman Celso D. Gagan and Commissioners Raul C. Flores and Emmanuel M. Dalman.
[2]
Respondent COA erroneously considered the P944 monthly allowance as RATA from the Supreme
Court in its Comment dated October 23, 2000 and Memorandum dated June 26, 2001. Rollo, pp.
53, 103.
[3]
Annex "D," Certification of the Office of the Municipal Accountant; Petition for Certiorari, p. 5.
[4]
Annex "E," Resolution No. 101, Series of 1991, Rollo, p. 35.
[5]
Petition for Certiorari, p. 4.
[6]
Rollo, p. 38.
[7]
Rollo, pp. 40-42.
[8]
Rollo, pp. 22-25.
[9]
Respondent COA erroneously considered the P944 monthly allowance being received by petitioner
judge from the local funds of the municipality since 1984 as RATA from the Supreme Court. Thus,
in 1993 when the municipality increased said allowance to P1,600 (an increase of P656), COA
opposed the grant of the whole P1,600 monthly allowance because the municipality supposedly
could not grant RATA to petitioner judge in addition to the RATA already granted by the Supreme
Court. See Comment dated October 23, 2000 and Memorandum dated June 26, 2001, Rollo, pp.
53, 103.
[10]
Rollo, pp. 22-25, 31-33, 36-38, 57-64.
[11]
Rollo, pp. 10-17.
[12]
In Allarde vs. Commission on Audit, 218 SCRA 227 [1993], we ruled that the use of the word may in
LOI No. 1418 signifies that the allowance may not be demanded as a matter of right, but
is entirely dependent on the will of the municipality concerned. It should be treated as an honorarium, an
amount that is given not as a matter of obligation but in appreciation of services rendered, a
voluntary donation in consideration for services which admit of no compensation in money
(Santiago vs. Commission on Audit, 199 SCRA 128, 130).
[13]
The law took effect on January 1, 1992.
[14]
G.R. No. 125350, December 3, 2002.
[15]
Instead of filing a comment on behalf of respondent COA in this case, the Solicitor General filed
a manifestation supporting the position of petitioner judges. The Solicitor General argued
that (1) DBM only enjoyed the power to review and determine whether disbursement of funds
were made in accordance with the ordinance passed by a LGU while (2) the COA had no more
than auditorial visitation powers over the LGUs pursuant to Section 348 of RA 7160 which
provides for the power to inspect at any time the financial accounts of LGUs. Moreover, the
Solicitor General opined that the DBM and the respondent are only authorized under RA 7160 to
promulgate a Budget Operations Manual for LGUs, to improve and systematize methods,
techniques and procedures employed in budget preparation, authorization, execution and
accountability pursuant to Section 354 of RA 7160. The Solicitor General pointed out that LBC 55
was not exercised under any of the aforementioned provisions.
[16]
Rollo, pp. 22-25.
[17]
China Banking Corporation vs. Court of Appeals, 265 SCRA 327 [1996].
[18]
U.S. vs. Palacio, 33 Phil 208 [1916]; Maceda vs. Macaraeg, 197 SCRA 771 [1991].
[19]
Manila Railroad Co. vs. Rafferty, 40 Phil 224 [1919]; Commissioner of Internal Revenue vs. Court of
Appeals, 207 SCRA 487 [1992].
[20]
De Villa vs. Court of Appeals, 195 SCRA 722 [1991].
[21]
A special law is one which relates to particular persons or things of a class, or to a particular portion or
section of the state only. U.S. vs. Serapio, 23 Phil 584 [1912].
[22]
A general law is one which affects all people of the state or all of a particular class of persons in the
state or embraces a class of subjects or places and does not omit any subject or place naturally
belonging to such class. U.S. vs. Serapio, 23 Phil 584 [1912]; Valera vs. Tuason, 80 Phil 823
[1948]; Villegas vs. Subido, 41 SCRA 190 [1971].
[23]
Villegas vs. Subido, 41 SCRA 190 [1971].
[24]
Araneta vs. Concepcion, 99 Phil 709 [1956]; Sotto vs. Sotto, 43 Phil 688 [1922].
[25]
Maddumba vs. Ozaeta, 82 Phil 345 [1948]; Lopez vs. El Hogar Filipino, 47 Phil 249 [1925].
[26]
National agencies included in the national budget are Congress, Office of the President, Office of the
Vice-President, DA, DAR, DBM, DECS, DENR, DOF, DFA, DOH, DILG, DOJ, DOLE, DND,
DPWH, DOST, DSWD, DOT, DTI, DOTC, NEDA, Office of the Press Secretary, the Judiciary,
Constitutional Offices, Commission on Human Rights, State Universities and Colleges and
Autonomous Regions. See the GAA of 1993 as example.
[27]
Section 25, Article II; Section 2, Article X, 1987 Constitution.
[28]
The LBC No. 53 was issued by the DBM by virtue of Administrative Order No. 42 which clarified
the role of the DBM in the administration of the compensation and position classification systems in
the LGUs and mandated it, among other things, to provide guidelines for the grant of allowances
and additional forms of compensation by the LGUs. AO No. 42 was issued by the President by
virtue of his power of general supervision over the LGUs under Section 25 of the Local
Government Code of 1991.
[29]
Also Section 458(a)(1)(xi) and Section 468(a)(1)(xi), Local Government Code of 1991.
[30]
Supra note 17.
[31]
Section 324. Budgetary Requirements. - The budgets of local government units for any fiscal year shall
comply with the following requirements:
(a) The aggregate amount appropriated shall not exceed the estimates of income;
(b) Full provision shall be made for all statutory and contractual obligations of the local government unit
concerned: Provided, however, that the amount of appropriations for debt servicing shall not
exceed twenty percent (20%) of the regular income of the local government unit concerned;
(c) In the case of provinces, cities, and municipalities, aid to component barangays shall be provided in
amounts of not less than One thousand pesos (P1,000.00) per barangay; and
(d) Five percent (5%) of the estimated revenue from regular sources shall be set aside as an annual lump
sum appropriation for unforeseen expenditures arising from the occurrence of calamities:
Provided, however, that such appropriation shall be used only in the area, or a portion thereof, of
the local government unit or other areas declared in a state of calamity by the President.
[32]
Section 325. General Limitations. - The use of the provincial, city and municipal funds shall be subject
to the following limitations:
(a) The total appropriations, whether annual or supplemental, for personal services of a local government
unit for one (1) fiscal year shall not exceed forty-five (45%) in the case of first to third class
provinces, cities, and municipalities, and fifty-five percent (55%) in the case of fourth class or
lower, of the total annual income from regular sources realized in the next preceding fiscal year.
The appropriations for salaries, wages, representation and transportation allowances of officials
and employees of the public utilities and economic enterprises owned, operated, and maintained
by the local government unit concerned shall not be included in the annual budget or in the
computation of the maximum amount for personal services. The appropriations for the personal
services of such economic enterprises shall be charged to their respective budgets;
(b) No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position
or other positions of equivalent rank by applicable laws or rules and regulations
issued thereunder;
(c) No local fund shall be appropriated to increase or adjust salaries or wages of officials and employees
of the national government, except as may be expressly authorized by law;
(d) In cases of abolition of positions and the creation of new ones resulting from the abolition of existing
positions in the career service, such abolition or creation shall be made in accordance with
pertinent provisions of this code and the civil service law, rules and regulations;
(e) Positions in the official plantilla for career positions which are occupied by incumbents holding
permanent appointments shall be covered by adequate appropriations;
(f) No changes in designation or nomenclature of positions resulting in a promotion or demotion in rank or
increase or decrease in compensation shall be allowed, except when the position is actually
vacant, and the filling of such positions shall be strictly made in accordance with the civil service
law, rules and regulations;
(g) The creation of new positions and salary increases or adjustments shall in no case be made
retroactive; and
(h) The annual appropriations for discretionary purposes of the local chief executive shall not exceed two
percent (2%) of the actual receipts derived from basic real property tax in the next preceding
calendar year. Discretionary funds shall be disbursed only for public purposes to be supported by
appropriate vouchers and subject to such guidelines as may be prescribed by law. No amount
shall be appropriated for the same purpose except as authorized under this Section.
[33]
Paragraph (a) should be read in conjunction with the recent circular of the DBM, Local Budget
Circular No. 75 dated July 12, 2002 entitled Guidelines on Personal Services Limitation. Section 5.5
thereof entitled Honoraria of National Government Personnel provides: The appropriation
intended to be granted as honoraria and similar benefits to national government personnel shall
be classified as Maintenance and Other Operating Expenses (MOOE) since these are not
personal services costs of the local government unit.
[34]
Figuerres vs. Court of Appeals, 305 SCRA 206 [1999].
[35]
Ibid.